This upload is an article in InterMEDIA, July 2019 (www.iicom.org) by Russell Southwood, Balancing Act and Steve Song. It looks at the crisis in African telecoms and internet regulation and suggest a number of different approaches that might help overcome current barriers to wider access.

1. S
ub-Saharan African countries have had over a
decade of pioneering regulation that opened
up competition and got communications
services to a large number of people. But
competition has turned to consolidation and the
new data-driven future poses difficult challenges.
The period from 1994-2010 will probably be seen
as the golden age of regulation in Sub-Saharan
Africa. New regulatory bodies issued licences to
eager investors willing to compete with each other
to make money in this new industry. The sheer
thirst for service from the new mobile network
operators (MNOs) drove growth at a dizzying pace.
It bought new wealth to the operators, to business
and government (through new taxes) and it
opened up a world of new social and economic
opportunities for Africa’s citizens.
The achievements of these new markets gave
African countries a justifiable pride in their success.
Leapfrogging fixed technology and operating in the
toughest of circumstances gave everyone a sense
that the near impossible was actually being done.
Innovations like mobile money showed that it was
possible to create change at every level of the
economy, even among the poorest of citizens.
The enemy of these changes was often the
state-owned incumbents that resisted change at
every turn. Their extensive monopoly privileges
were not matched by an equivalent sense of
responsibility for the public tasks they were meant
to undertake.
But even before the move to all-data platforms
became the next tectonic shift in telecoms, the
dazzling spectacle of almost stratospheric growth
hid several less welcome developments. Newly
minted communications regulators were often
far from independent and in many cases
administered existing market realities rather than
focusing on the bigger picture of what regulation
was for: getting communications services to all
citizens. Over time, as MNOs became more
powerful in the market, one or more of them took
over the incumbency role from the state-owned
operator and sought to entrench their own newly
acquired privileges.
Now the challenge of the irreversible shift from a
number of highly controlled vertical markets
including voice and SMS to an all-data platform has
put the business model of all the MNOs under
pressure. A data-centric future means that all
services will be delivered via the same digital
platform including services like financial payments.1
This digital future entails substantial new
investment in infrastructure that can carry large
amounts of data yet with lower rewards than voice
and SMS has given in the past. It puts the traditional
MNO business model – historically based on voice
and SMS revenues – under considerable strain.
As a result, along with other factors, consolidation
has begun to happen in many markets. For example,
the slow exit of Millicom’s Tigo from Sub-Saharan
African markets is the most dramatic of these
consolidations.2
MARKET ANALYSIS
Sub-Saharan Africa is made up of 49 countries so it
is often difficult to generalise beyond broad trends.
To make some judgments about how competitive
and easy to enter these markets are, we have
assembled a table (see page 20) that looks at the
major players in these 49 markets. The table
analyses the number of national mobile and fixed
operators in each market.
In the near total absence of large internet service
providers (ISPs), the majority of revenues in each
market are generated by,
in many cases, a relatively
small number of MNOs.
Alongside this, there is
the classic economic
competition assumption
that more operators in a
market will mean that it
is more competitive.
At a high level, the
good news is that 53%3
of the 49 Sub-Saharan
African countries have either some version of three
or four mobile operators or in the case of Ghana,
five operators. The different versions include a MNO
created through the licensing of the former
state-owned incumbent fixed-line operator.
Ownership of an MNO by the state is not always a
formula for commercial success as the case of
Gamcel4
and many others shows.
The bad news is the flip side of this coin: 47% of
countries still have markets where there is either
only a monopoly operator (4 countries) or a mobile
duopoly (20 countries). In other words, after over
20 years of regulation, just under half of the
countries in the continent still do not have
PAVING THE
DIGITAL WAY
18 InterMEDIA | July 2019 Vol 47 Issue 2 www.iicom.org
Regulation in Sub-Saharan Africa has hit a brick wall, write RUSSELL SOUTHWOOD
and STEVE SONG. What changes are needed for a data-centric future?
A F R I C A
The shift to data
platforms has put
the business model
of all the MNOs
under pressure.

2. anything that could reasonably be described as a
competitive market.
But even those with a wider range of operators
still suffer from things that create less than optimal
market conditions. In two of the countries – Angola
and Namibia – government capital predominates.
In two countries – Kenya and Senegal – there is a
clear dominant operator and in both cases the
government owns a significant share in these
operators. Even where there is no clear cut case of
there being a dominant operator, some MNOs have
considerable market power through having the
largest wholesale fibre optic network in a country.
In Cameroon, the state-owned incumbent Camtel
has a monopoly of both wholesale networks and
landing stations. Only 18 African countries have
privatised their state-owned incumbents and
many are inefficient, riddled with patronage and
are sources of income for the politicians who
control them.
Beyond these formalised state links, there are also
networks of patronage through local shareholdings
that are granted by government, regulators and
operators. Angola and Cameroon are the most
egregious examples5
although the former under its
new president seems to want to change things.
Continuing commercial pressures are also likely
to make these markets far less competitive. Seven of
the more competitive markets have operators that
are either likely to merge or close down in the
short-term. Therefore, in many countries, the
mobile space – which represents the majority of
voice and data revenues – has become less
competitive.
The unintended consequence of assigning
spectrum licences to operators at high prices,
whether through auctions or other means, has been
to create a serious barrier to market entry. Cost of
market entry combined with the dominance of
existing MNOs discourages most attempts to create
new business models. Only an operator with
July 2019 Vol 47 Issue 2 | InterMEDIA 19www.iicom.org
massive wealth and political backing, such as the
recent example of Reliance Jio in India,6
can create a
business model that is fit for a more data-centric
market.
The mobile operators that often had to fight tooth
and nail for fair treatment against the state-owned
incumbents have now effectively drawn up the
ladder behind them. Under pressure from over the
top (OTT) players, they have fought hard to firewall
traditional profit centres. As an increasing number
of Africans become daily internet users, it is
reasonable to ask whether the mobile operators will
allow enough “air” into the new digital ecosystem
(through revenue sharing) or whether they will
seek to dominate these new content and service
revenues as well.
Independent ISPs that might provide some
alternative have struggled to find capital and have
often lacked any market vision beyond servicing a
relatively small number of corporate clients. For
those unable to raise capital on stock markets, the
interest costs of domestic loan capital remain in
double digits in a period where the cost of
international capital from Europe and the US has
never been lower.
Large scale, internet backhaul companies with a
multi-country presence are small in number (see
last column in the table). There is very little
progression from starting as a small network
communications company and becoming much
larger. There is also no route to creating a large
number of diverse companies of this kind of any
size. For as one of the managers from one of the
larger ISPs recently put it:7
“The regulator looks after the
larger operators rather than competition through local
entrepreneurs. However, these would provide more jobs and
choice for local users.”
Globally, in 2018 67% of people were unique
mobile phone subscribers and 47% were mobile
internet users. By contrast, only 45% of people in
Sub-Saharan Africa were unique mobile
A pupil at Seherelela
primary school in
Botswana using a
tablet during an ICT
class. Classes are
given by Golebileone
Setlamelo, a universal
service fund IT officer
at the school.This is
a finalist picture in
the 2019WSIS photo
contest. See
bit.ly/2FW4fs8

3. 20 InterMEDIA | July 2019 Vol 47 Issue 2 www.iicom.org
is affordable, especially in rural areas where
incomes are lower.
The second issue is harder to solve: 47% of
Africans live outside of mobile broadband coverage.
Under market pressure, it is unlikely that most
mobile operators will seek speedy rollout to these
non “market addressable” areas. With a few notable
exceptions, state owned telcos and universal service
schemes have very limited success in closing the
divide in terms of voice so it is unlikely they will be
more successful with data.
Given these challenges, where should African
regulators place their focus? If everything
(including voice through things like WhatsApp) is
increasingly just a part of a generic data service and
ever larger parts of African business, government
and civil society are dependent on access to data to
do what they do, what is needed?
The objective must surely be to establish data
subscribers and only 24% were mobile internet
users. But even the latter figure overstates internet
use: based on data from operator, MTN, with the
exception of Ghana and South Africa, only 30-40%
of its users are active, defined as using more than
5 MB per month. The scale of the challenge to close
this digital divide is considerable and not much will
happen quickly unless more enabling regulatory
environments are created.8
The GSMA graphic (see inset figure) highlights
two major issues that require urgent attention.
The first issue is that 30% of people in Sub-Saharan
Africa are not using mobile broadband in spite of
being within range of a mobile broadband signal.
There are many barriers to use including gender
relations, education, literacy and languages but the
simplest one to address is the cost of data itself.
Data prices have fallen in many countries across the
continent but all too often they remain above what
OVERVIEW OF SUB-SAHARAN AFRICAN COUNTRY MARKETS
Versions of
3 MNOs
Botswana
Burkina Faso
Burundi
Cameroon **
Congo-B n
Cote d’Ivoire
Gabon n
Gambia n
Guinea
Madagascar
Mali
Mauritania
Mauritius
Mozambique
Niger
Senegal ***
Sudan
Zambia
Zimbabwe
19 (39%)
Versions of
4 MNOs
DRC
Nigeria n
Somalia
South Africa
Tanzania
Uganda n
6 (12.2%)
5 MNOs
Ghana
1 (2%)
Large internet
backhaul firms
Liquid Telecom
Internet Solutions (IS)
CSquared
Gondwana
Paratus
Points of analysis key
* Outside of monopoly countries, places where government capital predominates Angola, Namibia 2
** Outside monopoly countries, wholesale monopoly Cameroon 1
*** Dominant operator (in both cases Govt owns significant shareholding) Kenya, Senegal 2
n
Possible future loss of one or more mobile operators CAR, Congo-B, 6
Gambia, Ghana,
Nigeria, Uganda
Extremely small markets (below 1 million population) Djibouti, 6
Equatorial Guinea,
Cape Verde, Comores,
Sao Tome, Seychelles
Monopoly
Djibouti
Equatorial Guinea
Eritrea
Ethiopia
4 (8%)
Mobile duopoly
Angola *
Benin
Cape Verde
CAR n
Chad
Comores
Guinea Bissau
Kenya ***
Lesotho
Liberia
Malawi
Namibia *
Rwanda
Sao Tome
Seychelles
Sierra Leone
South Sudan
Swaziland
Togo
19 (39%)
47%
30%
24%
Out of mobile broadband
coverage (coverage gap)
Covered by mobile broadband
but don’t subscribe (usage gap)
Mobile internet
subscribers
Sub-Saharan Africa
AFRICA’S HAVE AND HAVE-NOTS
Source: Russell Southwood/Steve Song
Source: GSMA
A F R I C A

4. networks that can deliver a high quality of
connectivity to the maximum number of people in
the country at the lowest possible price point. The
income levels of users in Africa are not the same as
countries in Europe and the US and therefore data
prices for users need to be lower than at present in
almost all Sub-Saharan African countries.
REGULATION OF FIBRE NETWORKS
At the heart of Africa’s data future are the fibre
optic arteries traversing the continent. Because of
their high capital cost, fibre networks often tend
towards monopoly. If there is only one effective
backbone network, then the price and quality of
service needs to be regulated to meet the pricing
objective outlined above.
Fibre infrastructure is a key national asset and
should be treated like other key infrastructures
like energy and water. Public ownership of fibre
networks through government is not necessarily
the best and only way of enabling digital
transformation. It is a curious fact that state-owned
fibre networks nearly always charge more for
capacity than similar competitive networks.
Regulators need to focus on driving down
prices at the wholesale level in order to enable
competition in the last mile and to reduce overall
retail prices. At the light touch end, this would be
through insisting that there was a publicly
available wholesale rate-card (with terms and costs
of access) available from any dominant wholesale
network operator, public or private. At the tougher
end, it would involve agreeing a cap on wholesale
prices through a clearly calculated formula.
Governments (at both local and national level)
and regulators needs to ensure that the costs and
ease of building fibre are reduced to their lowest
practical level. Historically, rights of way
(permission given by property owners to allow fibre
to traverse their land) in Sub-Saharan Africa have
been a form of tax-raising for local government.
Often, the process of obtaining these permissions is
both lengthy and bureaucratic. Once obtained,
there is typically no legal or operational framework
to protect the fibre optic cables from other civil
works like road improvements. Rights of way should
be coordinated through an agency capable of
offering fast response times and administering the
protection of subsequent works. Where appropriate,
municipal authorities should actively invest in the
building of “open access” fibre ducts to dramatically
lower the cost for operators to deploy fibre networks
in their cities.
INCENTIVISING MARKET ENTRY FOR NEW OPERATORS
To create new competition, there needs to be
significant incentives that will help tip the balance
against market advantages of the larger market
entities like mobile operators. A sympathetic
regulatory framework is needed that does not treat
new, smaller operators on the same terms as one of
the larger mobile operators.
For example, is it really necessary to licence
ISPs? A simple registration process with a low
administrative fee (as is found in countries such as
July 2019 Vol 47 Issue 2 | InterMEDIA 21www.iicom.org
Canada, New Zealand and the US) would be perfectly
adequate. If there are a large number of ISPs and one
fails, then it doesn’t affect the whole country.
Licensing costs are but one small part of the
barriers to market entry experienced by smaller
operators. The cost of spectrum – which is set by the
price paid by larger companies – now acts as a
means of excluding others. Each new iteration of
mobile technologies – 3G, 4G, 5G – creates yet
another price hurdle for smaller operators. Thus,
as we’ll outline below, there needs to be several
different approaches to offering cheaper spectrum
access from “free” spectrum (as in the existing ISM
bands) to spectrum sharing.
Lastly, there needs to be low-cost access to capital
to allow smaller market entrants to grow over time.
A revolving loan fund could be set up that allowed
companies with below a certain level of turnover to
apply for expansion loans. Compared with MNO
investments, these sums would be modest but they
would help nurture a diverse range of data
providers with a far wider range of user business
models.
These kinds of adjustments to favour smaller
operators are eminently possible. For example, the
Kenyan communications regulator will allow local
company JTL to spread out its payments for its
US$25 million spectrum licence over the 10 year
period of the licence. This is a step in the right
direction although the cost of spectrum access
remains high. The need to service spectrum licence
debt may still incentivise operators to build
infrastructure in the most lucrative, densely
populated urban areas rather than in sparsely
populated, lower-income rural regions.
PRINCIPLES FOR A MORE DIVERSE
DIGITAL ECOSYSTEM
Open access: No single operator or cartel can use control of a
particular network layer to derive an unreasonable return. Networks
are a national asset and should be available to all who participate in
the market.
Diversity: Large oligopolistic organisations do not breed innovation
and find it hard to change their business models. Nobody knows yet
the best business models for data so a diversity of approaches and
technology is essential.
Local: Getting local involvement from national to local level is
important. Having a local minority shareholder is a start but is not
enough; there needs to be steadily accumulating capital of both
money and expertise locally. The new digital ecosystem needs to
embrace a wide range of local actors. The voice of users/consumers
should be represented at board level in large organisations.
Innovation: Enabling new market entrants to nip at the heels of the
incumbents is the only way to keep the licensed“profit takers”from
getting complacent. There needs to be innovation that will address
service delivery to low-income and rural customers.
Private sector or state-owned are not the only alternatives:
Neither the market nor the state alone will deliver coverage and
services to low-income communities. Local structures are often best
placed to respond to demand in rural areas.
A F R I C A

5. TURBOCHARGING THE USE OF SPECTRUM
Spectrum pricing acts as a disincentive to opening
up new markets, particularly for those on low
incomes. Common sense tells you that a person in
say Lagos, Nairobi or Dakar can afford a greater
average cost of spectrum per head than a person
living in a rural village: one size does not fit all.
Worse still, the shape of what is possible – both in
the market and outside of the market – is then
distorted by a spectrum price set by a very small
number of buyers. Governments and regulators
giving in to the temptation to maximise revenues
from the sale of spectrum licences, create the
unintended consequence of making it hard to
deliver a cost-effective service to low-income users.
A big advantage of the licence-exempt ISM bands
is that a whole data ecosystem has evolved using
relatively cheap, plug and play Wi-Fi technology.
Indeed the majority of data traffic originates from
these networks rather than the traditionally more
expensive MNO networks. Regulators wanting to
promote cheaper data prices should pay more
attention to innovations in charging for spectrum
elsewhere in the world.
The US is exploring expanding free access to
spectrum in the ISM bands from 5 to 6 GHz.9
Also, it
is opening up the Citizen Band Radio Spectrum
(CBRS) at 3.5 GHz for shared LTE use, something
that has gone almost unnoticed elsewhere. There
are also existing ISM bands in the 1.7 and 2.4 GHz
frequencies, ideal for broadband backhaul, that
many African countries make it difficult to access.
Dynamic spectrum technology (formerly known
as TV white spaces) offers a proven route to
maximising the use of spectrum and sharing it
between different operators. In many parts of
Sub-Saharan Africa, spectrum is almost unused in
uncovered rural areas but the MNOs protest loudly
whenever any attempt is made to argue for its use.
One approach to breaking this logjam is to create
secondary use regulation for spectrum that would
allow smaller companies to lease the spectrum in
uncovered rural areas at a much lower price or
perhaps in exchange for reduced universal service
fund contributions from the primary license holder.
A key to creating a greater degree of innovation
and competition is the need to have free spectrum
that will allow small rural operators to connect
back into the core network. Often a single operator
will be able to lock out new and potential small
entrants through the wholesale terms it offers. As
an example, the 11 GHz frequency offers a lot of
throughput over long distances and there are a
number of innovative technology vendors selling
cost-effective equipment that can make this
possible.
EMBRACING TECHNOLOGICAL DIVERSITY
Existing MNOs use identical technologies to operate
their networks. Key parts of their business are often
outsourced to the same vendors, from tower
ownership and operation to billing systems to
customer management. The key technologies are
bought in large packages from a very small number
of vendors. Not surprisingly there is not a great deal
of competitive difference in technology between operators and despite
their best efforts, often not much difference in the services provided
and the quality of them.
Data networks allow a much wider range of equipment to be used to
deliver connectivity across the network and to customers. Much of
what used to be built into hardware is now a software option, offering
more opportunities to upgrade and change existing networks than
existing analogue equivalents. Smaller companies are often in a
better position to take advantage of these kinds of technologies, which
can give them a competitive edge over their larger rivals on the all
important customer needs of speed and price.
GETTING TO THE HARD-TO-REACH IN RURAL AREAS
MNOs have to produce a return for their shareholders and are
therefore not always best placed to address markets with scattered,
low-income potential users. Their level of overheads means that their
minimum paying customer base per base station is in the low
thousands. While network infrastructure costs in general are coming
down for all players including MNOs, they remain relatively high-cost
organisations trying to address a group of people who require a
low-cost solution. The same is true of state-owned incumbents who
carry many of the same kind of overheads and as already observed,
find it difficult to focus on this kind of task.
There are two kinds of organisation that might fill this service
delivery gap: small-scale ISPs and community cooperative networks.
Regulators should encourage local entrepreneurs to set up data
services in poorly served or unserved areas. These types of local ISPs
can begin to address edge markets where there are pockets of potential
revenues in small communities.
Rural community cooperatives can take many forms. They can be
tiny as the one in Lawrencetown, Nova Scotia, Canada. They can
address access challenges in regions that aren’t viable for large
operators such as Rhizomatica is doing in rural Oaxaca, Mexico,10
or
Zenzeleni in the Eastern Cape of South Africa.11
They can embody
commons principles as Guifi.net is doing in Catalunya, Spain.12
They
can enable farmers to dig their own fibre trenches to deliver 1 Gbps
(symmetric) internet service as Broadband for the Rural North (B4RN)
is doing in the UK.13
All of these structures and approaches have
relevance in the African context.
Local organisations will help keep income in local communities.
It is interesting to note that affordable access to broadband in rural
areas is by no means limited to African countries or even low-income
countries. The need for regulatory reform to address inclusive access is
a global one.
Without change, regulators have hit a brick wall. A small number of
mobile operators will not necessarily create a diverse and locally based
digital ecosystem for Africa’s citizens. Regulators need to act directly to
open their markets to a more diverse set of affordable access operators
and solutions.
22 InterMEDIA | July 2019 Vol 47 Issue 2 www.iicom.org
REFERENCES 1SouthwoodR(2018).Followthemoney.Intermedia462. 2MillicomtooffloadremainingAfricanunits;Econetlinked
withdeal.TeleGeograpy,20October2017.bit.ly/2iFuzhH3Roundingmeansthatthesefiguresdonotaddupto100%. 4Gamcelcallsfor
bailoutorriskhaltingoperation.Foroyaa,29May2019.bit.ly/2KZ7jYS 5Cameroon:FormerCamtelD-GDavidNkotoEmmaneisunder
investigationfortwocorruptionallegations,forbiddentoleavethecountry. BalancingAct,24May2019.bit.ly/2JmTKze/Angolan
presidentcancelsfourthmobilelicenceaftershareholdingcontroversy,BalancingAct,24May2019.bit.ly/2FSCnFh 6OECD(2016).How
MukeshAmbanishookupthephoneindustry,incharts.EconomicTimes,17October2018.bit.ly/2XoYzBL 7Thechallengesofbeinga
smallISPinGhana.BalancingAct,26April2019.bit.ly/2Jp8cGK 8Thedatainthissectionistakenfrom:Themobileeconomy–Sub-
SaharanAfrica2019GSMA. 9USregulatorproposesrulesfor6GHzWi-Fi.Wi-FiNow,18December2018.bit.ly/329KQxu 10‘Itfeelslikea
gift’:mobilephoneco-optransformsruralMexicancommunity.TheGuardian,15August2016.bit.ly/2bmzRGJ 11Thevillagethatbuiltits
ownWi-Finetwork. BBCvideo,28March2019.bbc.in/2COBmMX 12Discussedin:NavarroL(2018).NetworkInfrastructures:Thecommon
modelforlocalparticipation,governanceandsustainability. APCissuepaper.bit.ly/2XqQs2P 13‘BroadbandfortheRuralNorth’(B4RN)
–bestpracticeincommunity-drivenbroadbandroll-out.EuropeanCommisson,videointerview.bit.ly/2Jst7IV
RUSSELL SOUTHWOOD is CEO of Balancing Act (balancingact-africa.com), a
specialist in ICT in Africa; STEVE SONG is also a specialist in ICT in Africa and
currently a shared spectrum advocate at the Network Startup Resource Center
and a fellow-in-residence at the Mozilla Foundation.
A F R I C A